National Banking in Knoxville, Tennessee, 1864-1913

This is a study of the nine national banks which operated in Knoxville, Tennessee, from 1864 to 1913. The purpose of this study was to determine the major factors influencing the behavior of those banks as they responded to changes in the national regulatory environment and local business conditions. The local banks were compared with one another and with other groups of national banks to discover patterns of acquisition and use of funds. Information about assets and liabilities was obtained from reports made by national banks which were published in local newspapers or by the Comptroller of the Currency, from unpublished reports made by the local national banks, and from the correspondence of the local banks with the Comptroller of the Currency. Information about the national regulatory environment and about local business conditions was obtained from the work of other students of the National Banking System, from the Census, and from local histories.

The National Banking System has been the subject of much scholarly interest. There is general agreement about how that system influenced the stability of the economy, but there is less agreement about the effect that system had upon capital flows. In spite of generally accepted ideas about how banks in each of the three classes functioned, there have been few investigations of the operations of individual national banks and relatively little discussion of how local conditions affected the behavior of banks within each category. This study links change in the activities of the local banks with change in the structure of the local financial market. Other studies of the behavior of the broad divisions of the National Banking System have tended to emphasize the importance of statutory requirements and conceal the significance of local business and financial conditions.

The major finding of this study is that the national banks of Knoxville were not greatly limited by statutory requirements. Instead, the structure of assets and liabilities changed in response to the local business and financial environment. When that environment changed, the local banks' acquisition of liabilities and employment assets changed also. This study has also found that the laws governing national banks allowed them much more freedom to develop imaginative responses to changing business conditions than has been thought to be the case. Consequently, there was a wide range in the behavior patterns displayed by the local banks.